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Starbucks Earnings: What's Wall Street Saying

This story has been updated from 1:02 pm EDT to include Starbucks guidance and analyst quote.

NEW YORK (TheStreet) - Starbucks(SBUX - Get Report) is about to post its fiscal second-quarter results after market close on Thursday, but what Wall Street is really looking for on the call is more on what CEO Howard Schultz has to say about any of the company's growth initiatives, given that it aims to be a $100-billion market cap company.

That could be due to mobile payments (last month Starbucks introduced digital tipping through its app), or in expanded products like tea, packaged goods or even more details about select stores serving beer and wine.

At an investor day in March, Starbucks said that it is aiming to roughly double its market cap as part of its long-term growth targets.

For the March-ending quarter, analysts, according to Thomson Reuters, expect the company to report earnings of 56 cents a share, up 9% from last year, on revenue of $3.96 billion, up 11% year over year. Starbucks said in its first-quarter earnings release in January that it expects EPS of 54 cents to 55 cents for the second quarter.

Estimates are calling for Starbucks' quarterly same-store sales to rise 5.4% in the March-ending quarter, according to Consensus Metrix. Same-store sales are expected to also rise 5.4% for locations in "the Americas," 4.5% in emerging markets and 8.4% in China and Asia Pacific.

Analysts are noting that frigid weather as well as the rising price of coffee could impact earnings, however Starbucks comps, due to strong customer loyalty, are likely to offset that.

"Starbucks U.S. sales should surprise to the upside due to holiday gift cards and the expanded menu. Whether the stock pops or is obliterated depends on comments for next year, and quarter to date traffic amid improved weather," wrote Brian Sozzi, CEO of Belus Capital Advisors, in an email. "Chipotle's (CMG) strong, strong sales were a good guide as to what we could expect from Starbucks."

We think F1Q trends held steady into F2Q, and post-holiday gift card redemption could potentially offset any weather-related choppiness and drive upside to our SSS estimate. We also may be slightly conservative in our expectations around store marketing expenses, which could drive upside to our margin forecast.

Sharon Zackfia, William Blair & Co. (Outperform; $58-$83 PT)

With coffee futures up more than 60% since the end of January to roughly $2 per pound on dry conditions in Brazil, investors may hope for more clarity on the impact to Starbucks although management may refrain from providing such guidance until July once the Brazilian harvest is complete. With Starbucks already fully locked in for its coffee needs for fiscal 2014, we do not expect any impact this year from the recent spike (coffee is expected to be a $0.09 to $0.10 benefit). Looking into fiscal 2015, we estimate roughly half of Starbucks' coffee needs are likely bought at this point, which we calculate would translate into an approximate $0.04 to $0.05 headwind for fiscal 2015 and a $0.06 to $0.07 headwind for fiscal 2016 if coffee stays at roughly $2 per pound.

Nick Setyan, Wedbush Securities (Outperform; $90 PT)

Our checks of 5% of U.S. co-owned locations indicate Americas SSS growth is tracking at ~6%, slightly above consensus of 5.4%. Increased sales of food products, and specifically La Boulange pastries, were consistently cited as a driver of both traffic and average check, with commentary pointing to a more incremental contribution vs. our previous checks. We expect the recent introduction of new breakfast sandwiches as well as the continued La Boulange rollout to continue to contribute to SSS growth ahead of expectations in FY14.

Bonnie Herzog, Wells Fargo Securities (Outperform; $87-$89)

In the recent four weeks ending 4/12/14, Starbucks brand packaged coffee (ex-pods) dollar sales fell 11.4%, driven by 8.4% unit decline and -3.3% pricing. Though unit results were a bit softer than usual, we note Easter was not included this period though it was in the year-ago period. Further, pricing continues to be soft, driven by a packaged coffee list price decrease SBUX took in May 2013, which is not yet fully lapped. Starbucks' brand packaged coffee share (ex-pods) fell to 4.8%--down from 5.1% last period and 5.5% last year. SBUX total share of the ground category [including] pods was 11.5% -- sequential and yr/yr growth of +0.2 points, possibly driven by slightly lower price gaps to competitor brands in packaged coffee. Seattle's Best's dollar sales were +2.1% after 9 sequential periods of decline. Bottom line -- SBUX gained slight sequential and yr/yr share and outperformed the category. We believe these trends speak to SBUX customers' strong brand loyalty.